South West Employers
Legal Aspects & EU Procurement
Trainer:
Date:
Activity 1 - Icebreaker
How many points do you have? _______
Is a middle child
Likes to eat
Japanese food
Is wearing pink
Plays a team sport
Speaks another
language
(1 point)
(1 point)
(1 point)
(1 point)
(1 point)
Wears glasses
Is over 6’ tall
Has less than four
letters in his/her
first name
Has a last name
that starts with a W
Has green eyes
(1 point)
(1 point)
(1 point)
(1 point)
(1 point)
Owns a Vauxhall
car
Likes classical
music
Preferred Maths to
English in school
Knows someone
famous
Has red hair
(2 points)
(2 points)
(2 points)
(2 points)
(2 points)
Has more than 2
children
Has made a
parachute jump
Has visited more
than 10 countries
Has more than 7
letters in his/her first
name.
Has a birthday in the
same month as me
(3 points)
(3 points)
(3 points)
(3 points)
(3 points)
One unusual fact I have found out about someone here is? ____________________________ (5 points)
Activity 2 - Groundrules

Groundrules help to create a positive and
safe learning environment. Discuss and
agree a list of between 3 and 5 rules that
all participants are comfortable with
Objectives

At the end of the session, participants will have knowledge
and an understanding of:

Some of the key legal and procedural requirements of the EU public
procurement directives

Public Contracts directive:
• Application of threshold values and competition requirements
• Procurement routes: tenders, frameworks and negotiated approaches
• Best practice tendering
• Legal challenges and implications for public procurers
• Selection and Award

Remedies directive:
• ‘Alcatel’ and managing challenges

Freedom of Information Act and transparency
Sections
1.
Legal framework and thresholds
2.
EU procurement procedures
3.
Legal challenges and implications
4.
Tendering practice
What is procurement?
“ . . . process of acquiring supplies, works and services, covering acquisition from
both third parties and in-house providers. The process spans the whole cycle from
identification of needs, through to the end of a service contract or the end of the
useful life of an asset”
Define &
review need
Exit &
termination
Manage
contract
performance
Manage
implementation
and transition
Includes:
• Revenue expenditure
Develop
specification
Implement
Planning
• Capital expenditure
Determine
procurement
strategy
• Strategic commissioning
• Acquiring third sector
services
• Grant-funded opportunities
Contract
award
Invite
Negotiate?
Pre-qualify
suppliers
Enquiry
Evaluate
tenders
Issue RFQ or
ITT
• Collaboration with others
Regulations & governance

EC Treaty (Recital 9)

EU Consolidated Directive 2004/18/EC
• Equal treatment

Public Contracts Regulations 2006 (A)
• Transparency
Key principles:
• Non-discrimination
• Mutual recognition


Your local Contract Procedure Rules
Competition Act – a more generic law
• Proportionality
• Value for Money
These rules and regulations are enforced with statutory powers and there would be
specific legal ramifications in our failure to comply.
The recent growth in legal claims and challenges – combined with an evolving
backdrop of legislation and case law – places increasing responsibility on all public
officers to ensure adherence to procedure and due process
Types of procurement
Supplies Corporate and operational expenditure (the supply
of goods and commodities)
Services
People and teams to plan, guide, advise, design,
develop, consult, care, operate and provide services
to your authority and its partners
Part A Services (primary)
Part B Services (residual)
Works
Construction and commissioning of facilities,
buildings, infrastructure and major capital assets
. . . same principles, same policies, similar procedures
Shared Services and collaboration

Trading between two independent public sector bodies (nonCrown) is also subject to the competition requirements of the
Public Contracts Regulations

In-house service provision is exempt

Three key tests for ‘in-house’ provision:
• Structural dependence – do we have strategic ownership/control over the
party?
• Economic dependence – is the other party wholly funded by us?
• No private sector participation

If explicitly set up as ‘central purchasing body’ such as OGC,
then exemption may apply
EU Thresholds
As of 1 January 2010
Goods and services
Works [projects]
= £156,442
= £3,927,260
Remember:
rules of aggregation apply when estimating contract value
Aggregation rules

Apply to the total contract value, not simply an annual
or monthly amount and including extensions

Ongoing requirements (supplies and services) require
aggregation over minimum of 48 months

Either aggregate projected values over next 4 years

Or, take last 12 months’ expenditure and x 4

Need to aggregate total expenditure across an authority

Avoid disaggregation

Limiting contract length to reduce value below thresholds

Breaking up needs to multiple contracts, each below
threshold

Considered breach of EU procurement directives
Activity 3 - Aggregation

Work in pairs or small groups and for each of the
scenarios, identify the aggregated value of the
contract opportunity and state whether this is above
or below the relevant EU threshold
Sections
1.
Legal framework and thresholds
2.
EU procurement procedures
3.
Legal challenges and implications
4.
Tendering practice
EU procurement routes
EU procurement procedures
Competitive
dialogue
procedure
Open
procedure
Restricted
procedure
Framework
agreement
Accelerated
procedure
Central
purchasing
Bodies
Negotiated
procedure
Electronic
auctions
Dynamic
purchasing
systems
Process overview – Open Tender
Min: 52 days
Max: 12 months
Publish PIN in OJEU (optional)
Publish Contract Notice in OJEU
Receive Expressions of Interest
Max: 6 days
Min: 45 days
40 days if hosted
15 days with PIN
Send out Invitation to Tender
Manage tender clarifications
Receive tenders
Evaluate tenders
(exclusion and selection)
Min: 10 days
Mandatory standstill period
Award contract
Debrief unsuccessful tenderers
Max: 48 days
Publish Award Notice in OJEU
Process overview – Restricted Tender
(assumes electronic submission)
Min: 52 days
Max: 12 months
Publish PIN in OJEU (optional)
Publish Contract Notice in OJEU
Receive Expressions of Interest
Min: 30 days
Max: 6 days
Send out PQQs
Receive completed PQQs
Evaluate to determine shortlist
(exclusion and selection)
Send out Invitation to Tender
Min: 35 days
30 days if hosted
17 days with PIN
Manage tender clarifications
Receive tenders
Evaluate tenders
Mandatory standstill period
Min: 10 days
Award contract
Max: 48 days
Debrief unsuccessful tenderers
Publish Award Notice in OJEU
Framework Agreements

Act as ‘call-off’ arrangement for 1, 3 or more suppliers

No commitment to specific volume – ideal where demand not
really known

If pre-existing, considerable time/efficiency advantages – no
full tender – however can be time-consuming to set up

Maximum length: 4 years

Examples: stationery, spares, consultancy

Examples of framework suppliers are Buying Solutions and
Pro5

Risk that suppliers can consider the mini competition
as a ‘double tender’
Negotiated approach (single supplier)

EU requires specific justification to use these
procedures

Specific limited circumstances:










When all tenders have proven irregular/unacceptable
No applications or tenders have been received
Where artistic/technical rights are exclusively protected
Extreme and unforeseeable urgency
Goods for R&D or experimentation only
Partial replacements of existing goods
Raw material commodities from exchange markets
Liquidation/bankruptcy conditions
Design contests
Specific relation to existing works
You should refer to your legal advisers for clarification
Some CPRs require prior written consent before negotiation is permitted
Services
& works
Supplies
Services
Works
Comparison
Advantages
Open Tenders
 Quicker
than restricted
 Simple/easily
understood
Disadvantages
 Can
generate many tenders
 Can
cause confusion between
evaluation and selection
Restricted
Tenders
 Selection
Most popular
 Most
Call off
orders from a
Framework
 Avoids
tendering process
 How
tailored to your need?
 Quick,
easy (once set up)
 Best
deal?
 Fewer
of suppliers
 Additional
procedure so takes longer
tenderers to manage
commonly used method
 Pre-qualified
 Time
consuming to set up the FWA in
the first place
Activity 4 – Procurement routes

Work in pairs or small groups and for each of the
scenarios, identify which procurement route you
should adopt given the requirements of the EU
Directives
Point of No Return
Ability to influence
the procurement
outcome
Once the OJEU contract notice
has been published and the tenders
invited, there is limited opportunity
to influence the outcome
Stages in the procurement procedure
A full EU procedure can take 6 -12 months to award the contract
Sections
1.
Legal framework and thresholds
2.
EU procurement procedures
3.
Legal challenges and implications
4.
Tendering practice
What is a challenge?

Any third party has the right to challenge the
procedures and decisions we make
 Derived
principles of EC Treaty (Recital 9):
• Equal treatment
• Non-discrimination
• Mutual recognition
• Proportionality
• Transparency

Alcatel provides a specific formal opportunity – but
there are wider general opportunities for challenge
too

General trend: challenges are on the increase
New Remedies Directive

Remedies Directive 2007/66/EC - incorporated into
UK law by 20 December 2009

Key provisions:
 EU-wide
adoption of the minimum 10-day ‘standstill’ period
 Requirement
to suspend procedure once challenged
to be considered ‘ineffective’ where serious
infringement (eg no prior contract notice, no standstill etc)
 Contracts
What is the impact of a challenge?

Potential suspension of process (…delay and
disruption)

Investigation and discovery of documentation

Consultation with relevant third parties

Potential legal involvement/action (…cost)
And if outside of procedure:
• Potential injunction/set aside
• Potential damages
• Reputational issues
• Potential disciplinary action for the relevant officer(s)
Recent case law - implications
Case
Outcome
EMM G Lianakis AE and others v
Dimos Alexandroupolis and others
(2008)
• Tenderers must be on equal footing with transparent criteria
• Can not evaluate suitability or experience of supplier at ‘award’
stage
Letting International Ltd v London
Borough of Newham (2008)
• Must provide full transparency of evaluation criteria
• Can not award marks for ‘exceeding’ requirements
McLaughlin & Harvey Ltd v
Department of Finance & Personnel
(2008)
•
Henry Brothers (Magherafelt) Ltd
and others v Department of
Education for Northern Ireland
(2008)
The full sub-criteria needs to be disclosed
• Award must be based on stated evaluation criteria
• Cannot be selective in choice of which price elements to consider
• MEAT implies cost has to be one of the criteria
Activity 5 - Learning Points Summary

Selection and award are two ________ processes within the
restricted procedure

Tenderers must be treated on an ___________

Once selected, cannot __________ selection

Must provide full ____________ of evaluation criteria

Award decision must be based on ______ criteria

____ must be one of the award criteria in MEAT

Cannot be _______ in your evaluation

Cannot score additional marks for ___________
stated
re-evaluate
added value
separate
partial
transparency
Cost
equal basis
Restricted Procedure: Selection & Award
Stage 1:
Exclusion
• Ineligible tenderers (offenders, insolvencies, etc)
(Regulation 23)
• Failure to meet “minimum standards”
(Regulations 24 and 25)
Stage 2:
Selection
• Selection of firms to invite to tender [short-list]
(Regulation 16)
Stage 3:
Award
• Award the tender to MEAT (or lowest price)
(Regulation 30)
“A contracting authority shall use criteria linked to the subject matter of the contract to
determine that an offer is the most economically advantageous, including quality, price,
technical merit, aesthetic and functional characteristics, environmental characteristics,
running costs, cost effectiveness, after-sales service, technical assistance, delivery date,
delivery period and period of completion.” (Regulation 30)
Activity 6 – Selection & Award

Work in pairs or small groups to consider each of the
criteria and decide in which part of the Selection &
Award process you should be assessing them
Sections
1.
Legal framework and thresholds
2.
EU procurement procedures
3.
Legal challenges and implications
4.
Tendering practice
Restricted tendering

Most popular route – two-stage process

‘Pre-qualifies’ acceptable suppliers

Basic process:
 Issue
PIN (optional)
 Advertise
OJEU notice
 Pre-qualify
 Invite
expressions of interest – selection decisions
tenders (typically 5 – 9 tenderers)
 Evaluate
tenders – award decision
 Standstill
period
 Award
contract
Notices
PIN
Prior Indicative Notice
OJEU
mandatory above threshold

Non-mandatory

Advertisement

Helps provide prior notice
(up to 12 months)


Helps reduce timescales
Serves as public notice of
contract opportunity to
respond

Timescales are mandatory

Required, irrespective of
procurement route
Pre-qualification questionnaire



Use your authority’s standard PQQ template, which should:

Identify all suitable and capable providers

Assess regulatory compliance

Assess key assurance criteria (such as E&D)

Identify and regulate sustainability
Evaluate the PQQ responses:

Minimum standards

Shortlist for tendering

Notify and debrief
Avoid repeating the PQQ evaluation criteria in the
subsequent ITT
Tips for pre-qualification
1.
Ensure every pre-qualified can fulfil the
requirements
2.
Check basic compliance documentation
3.
Credit check
4.
Check available references
5.
Avoid subjective and unsubstantiated selection
6.
Document your evaluation and archive
ITT – what to include

Background information

Instructions to tenderers

Form of Tender

Terms of Reference/Specification

Terms and conditions

Pricing schedule

Acceptance procedures, award criteria (and subcriteria) and
timescales

Contact and process for queries

Non-collusive declaration (bona fide tender)
Managing clarifications



Bidders will sometimes ask questions for clarification

Sometimes for genuine reasons

Sometimes for other motives
The basic golden rules:

Keep all communication written (and recorded)

Communicate with all bidders equally – same message, same time

Avoid 1:1 communications of any kind

Avoid controversy – keep it wholly professional
Remember this correspondence could become part of the
contract documentation
Tender submissions

Observe the deadline

Comply with procedures in your CPRs – there are
strict legal implications

Provide written receipt

Keep securely stored on your premises until agreed
time of opening

Record opening details
Tender evaluation

Evaluation criteria – as published on your OJEU
notice and recorded in the ITT

Appraisal logistics:
 Who?
 When?
 How?

Security and commercial sensitivity

Ethics and impartiality

Document the output
Who does the evaluation?

Subject to scale and complexity

A good buyer will include a wide mix of expertise in
the evaluation

Team should have been decided during the
procurement planning phase – it needs to reflect the
procurement outcomes and score with objectivity

Make sure you manage clarifications with equality

Record all correspondence and evaluation scorings
Qualified bids

Qualified tenders = non-compliance

Depending on your ITT instructions, the supplier has
chance to remove qualifier or face disqualification

You must follow this rule strictly – what is fair for
one, must be fair for all

Make sure any correspondence on this is
recorded on file
Making the award

Follow the procedures

Document it

Write to successful and unsuccessful tenderers

Debrief unsuccessful tenderers

Provide for a standstill ‘alcatel’ period (10 days)

Make the award conditional on acceptance of all
final agreements

Follow up with contract – avoid ‘letters of intent’
‘Alcatel’ standstill period
The standstill time limits:


The standstill period is a
minimum of 10 days where notice
sent electronically
When sent by other means,
either:

Standstill Notice (Award Decision
Notice) has to include:

The award criteria unless already
published

The reasons for the decision,
including the characteristics and
relative advantages of the
successful tender

The scores obtained by the
recipient and the party to be
awarded the contract

The successful party's name

A precise statement of when the
standstill period is expected to
end
15 days from day of sending;
or


The Standstill period must end on
a working day


10 days from day of receipt
i.e. if standstill period would end
on a non working day then the
actual standstill period ends at
the end of the next working day
The standstill period ends at
midnight
Debriefing suppliers

All unsuccessful tenderers should be written to stating the
reason they lost and how they ranked

Include comparisons to the winning bid

They may request further debriefing with more detailed
feedback

Unsuccessful tenderers have the right to know the reasons
for rejection

Assists suppliers in improving performance if the debriefing
includes weaknesses of unsuccessful bid

Assists in establishing open and honest reputation

Debriefing must be tailored to the tenderer

Buyers should record the results of the debriefing for
future reference
Documenting decisions

Regulatory compliance

Audit trail
 Due
process
 Compliance
 Public
interest
 Probity
 Political

sensitivity/interest
Freedom of Information Act 2000 implications
Activity 7 – Reflecting on learning

Discuss examples that group members have been
involved in for a recent tendering situation

Reflect on the content of the entire training day to
explore what you might do differently having now
attended the training session
Objectives

At the end of the session, participants will have knowledge
and an understanding of:

Some of the key legal and procedural requirements of the EU public
procurement directives

Public Contracts directive:
• Application of threshold values and competition requirements
• Procurement routes: tenders, frameworks and negotiated approaches
• Best practice tendering
• Legal challenges and implications for public procurers
• Selection and Award

Remedies directive:
• ‘Alcatel’ and managing challenges

Freedom of Information Act